Nigeria is a solidly import-dependent country. And a sharp decline in the value of the naira willy-nilly affects the wellbeing of the people. Also, in spite of all the prattle about non-oil exports, Nigeria has remained principally a mono-product exporting country. Oil remains our main export and, as we all know, the recent reality in the international pricing of oil has virtually left the government of Nigeria gasping for breath. So while the value of the naira has plummeted from over $140 per barrel a few months ago to less than $40 today, and gradually inching toward the production cost of the commodity, which is sometimes placed at $10 per barrel, the value of the naira has fallen by more than 30%. The situation is getting quite dangerous even for a president as unconcerned as Yar’Adua.
Add this to the already dire Nigerian situation â€“ no electric power supply, no potable water, no healthcare system, collapsed education system, total insecurity of life and property, worsening poverty levels, the obliteration of a once vibrant middle class â€“ and it becomes clear why Yar’Adua should be scared. He should forget about the charlatans around him who feed him with only what he wants to hear. The Nigerian economy is in a total shambles. The president needs to wake up and smell the coffee. He has less than a year to go before politics takes over the very serious business of real governance â€“ not that there’s much governance going on now anyway.
So many pieces of advice might have been offered the president, and what he usually does, from what we now know, is to form a committee. Without a plan as to what to do, the president simply throws committees at serious problems. And you know what they say about committees. Since he became president, he has formed three committees on the energy crisis and since then, of course, the situation has only worsened. Only recently, apparently in a Freudian slip, Mr Lanre Babalola, the minister of power who still appears green in his job, declared that there was still no master plan for the resolution of the power crisis after several billions of dollars have been spent.
But here are some suggestions about a few of the problems for whatever they are worth. For the deteriorating value of our national currency, I will recommend the Abacha formula to Yar’Adua before the naira starts competing with the Zimbabwean currency. No matter what anyone will want to say about Abacha â€“ and I concede there are many things to say of the late leader â€“ he maintained the value of the national currency throughout his five years in power at respectable levels. When he toppled the interim government of Chief Ernest Shonekan, the value of the naira was as low as N100 to a dollar. But when he took over, he confronted the problem frontally. In no time, he boosted the value and vigorously maintained it at N85 to a dollar. This was the value when General Abdulsalami Abubakar (rtd) took over and until Obasanjo mismanaged it to more than N120 to a dollar. But with today’s free fall, Yar’Adua is about cleaning up Obasanjo’s despicable image and taking his place. Obasanjo would certainly be pleased about that.
Abacha’s PTF also re-established the middle class in addition to refurbishing Nigeria’s obsolescent infrastructure. PTF worked because Abacha was sincere enough to convince a man of integrity with a track record to handle it. If it is not already too late, the president will do well to create a few well-funded intervention agencies as long as he has the political will to put the right people to head them. The most important success factor about this would be the persons he would be able to convince to manage these agencies. There was a difference in the success levels, for instance, between the PTF and NDDC or whatever the Ministry of Niger Delta intends to achieve only because of the difference in the personalities heading the different agencies. In any case, I do not think this option is still achievable.
But the catastrophe that hit the Nigerian bourse needs the president’s urgent and rapt attention. Almost every Nigerian, both high and low, must have been affected one way or the other by the tsunami that hit the Nigerian Stock Exchange. Billionaires have lost billions; millionaires have lost millions and the middle class has all but been wiped out. Several banks are still confused about how to recover the margin facilities they offered to investors. But what should worry Nigerians more is that the government is yet to make up its mind about what directions to go, while the situation worsens on a daily basis.
The situation has become so serious that investors who want to dispose of stocks cannot even find buyers. That, of course, is a symptom of a failed stock exchange. Yar’Adua’s government must now think on its feet and not appear more confused than the victims. It’s now time to upgrade the stock exchange crisis to a national security problem. And this calls for a big push solution, similar to what Barack Obama, the smart president of the United States, is currently doing with the huge stimulus package to bail out the troubled US economy. In this direction, the Yar’Adua government could set aside a huge amount â€“ even if such humongous amount would come from our idle foreign reserves to start buying up stocks on the Nigerian Stock Exchange. As soon as government starts buying up stocks, two things are likely to happen almost at once. First, those who have been itching to dump their stocks out of panic but who have had no buyers would quickly do so, but because the government would be available to mop up large quantities, the prices of the stocks would be controlled. But there are also several investors who believe in Warren Buffet’s time-honoured investment credo that people should go on a buying spree when prices are low. Such people would be encouraged by the fact that there is now a tangible action from government to salvage the bleak situation. Such investors would not only remain in the market but would also start buying again at the prevailing low prices so they could reap the profits that would accrue in the not-too-distant future.
Many big investors, including pension fund administrators who are long-term players, would also remain and start buying again. And as long as the government continues to buy all excess stocks and ensures that it is not competing with the new investors, the prices of stocks would only move up, and vibrancy would be restored to the market. By the time prices stabilise at respectable levels â€“ by which time the value of the purchased stocks at the disposal of the federal government would have doubled, tripled or even quadrupled â€“ the government could then start selling off into the same market by releasing the stocks gradually and intelligently without distorting the gains it has already achieved.
One reason this will work is because the crisis in the Nigerian Stock Exchange is not related to the global financial meltdown. And if Ndidi Okereke-Onyiuke and her gang had not mismanaged the Nigerian bourse long before the global financial meltdown, Nigeria could have been one of the few countries around the world that would have been smiling today, because our investment milieu is somewhat isolated from the rest of the world. And what that clearly leads to is that since Ndidi and her gang have not had the honour to resign, the government must, as a precondition for committing the people’s money to bail out the stock exchange, get the SEC to fire Ndidi with ignominy and with immediate effect.
There may be people who will not agree with this prescription to bail out the stock exchange, but do they have superior alternatives? So far, nothing has worked and Nigeria is dying. The situation is no longer a laughing matter.
E A R S H O T
Why Crime Is Such Good Business In Nigeria
The head of the Nigeria Prisons Service recently told Nigerians that, since 1999, no criminal sentenced to death has been executed. One no longer needs to ask why the corresponding period has also recorded the most wanton deaths through the activities of assassins and armed robbers. In fact, nobody has been convicted at all over the gruesome murders of Bola Ige, Marshall Harry, Aminasoari Dikibo, Funsho Williams and a host of others. No one is in jail over the massive rigging of the 2003 and 2007 general elections. And, in spite of all we know of the last 10 years, no one â€“ absolutely no one â€“ is in jail today for stealing government money. Former Governor Lucky Igbinedion was fined N3 million recently for stealing billions of naira. In fact, a few of those who stole the nation’s money in the most recent past have become some of the most influential people in Yar’Adua’s Nigeria, deciding and directing our fate as a people. Nigeria has become a country of rogues and crooks and the game has become that of the survival of the most criminal. We cannot build a respectable nation if we continue on this irresponsible path.